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- The Bank of Canada kept its policy rate at 0.25% (same level it has been throughout the pandemic), but is signalling that higher rates are coming soon.
- The Bank is ending quantitative easing (QE) and moving into the reinvestment phase, during which it will purchase Government of Canada bonds solely to replace maturing bonds. QE is a monetary policy tool in which a central bank attempts to stimulate growth in the economy by buying bonds or other financial assets in the open market to increase the money supply and encourage lending and investment.
- In Canada, robust economic growth has resumed, following a pause in the second quarter.
- The labour market conditions are also improving as indicated by the strong employment gains in recent months. However, labour shortages continue to persist in some sectors, as both employers and workers continue to search for skills and jobs respectively that are best suited to their individual needs.
- Housing activity is expected to remain upbeat, supported by high disposable incomes and low borrowing rates.
- The Bank expects CPI inflation to be elevated into next year and moderate back to around the 2% target by the backend of 2022.
Market Information •
November 5, 2021
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